Full Press Release Details
COMMUNITY HEALTH SYSTEMS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 30, 2022, one or more affiliates of Community Health Systems, Inc. (the Company ) entered into a definitive asset
purchase agreement, as amended (the Purchase Agreement ) for the sale of substantially all of the assets of Plateau Medical Center ( Plateau ) (25 licensed beds) in Oak Hill, West Virginia, to affiliates of Vandalia Health, Inc.
(the Transaction ). Effective April 1, 2023, one or more affiliates of the Company completed the sale of Plateau pursuant to the terms of the Purchase Agreement. The purchase price paid to the Company in connection with the
Transaction at a preliminary closing on March 31, 2023 was approximately $92 million in cash.
The Company has determined that
the operations of Plateau that were divested in the Transaction do not meet the definition of discontinued operations pursuant to Financial Accountings Standards Board Accounting Standards Codification 205 (ASC 205), Presentation of Financial
The accompanying unaudited pro forma condensed consolidated balance sheet of the Company is presented as if the
disposition of Plateau had occurred as of December 31, 2022. The estimated gain on sale in connection with the Transaction is reflected in the unaudited pro forma condensed balance sheet within retained earnings.
The accompanying unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2022 (the Pro Forma
Period ) includes certain pro forma adjustments to illustrate the estimated effect of the Company s disposition, as if the Transaction had occurred on January 1, 2022. The amounts included in the historical columns represent the
Company s historical balance sheet and statement of income for the Pro Forma Period presented.
The accompanying unaudited pro forma
condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and do not include all of the information and note disclosures required by generally accepted
accounting principles of the United States (GAAP). Pro forma financial information is intended to provide information about the continuing impact of a transaction by showing how a specific transaction might have affected historical financial
statements. Pro forma financial information illustrates only the isolated and objectively measurable (based on historically determined amounts) effects of a particular transaction, and excludes effects based on judgmental estimates of how historical
management practices and operating decisions may or may not have changed as a result of the transaction. Therefore, pro forma financial information does not include information about the possible or expected impact of current actions taken by
management in response to the Transaction, as if management s actions were carried out in previous reporting periods.
pro forma condensed consolidated financial information is subject to the assumptions and adjustments described in the accompanying notes. These assumptions and adjustments are based on information presently available. Actual adjustments may differ
materially from the information presented. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company for the period presented and in the opinion of the Company s
management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made. These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not
necessarily indicative of the results of operations or financial condition that would have been achieved had events reflected been completed as of the dates indicated, and may not be useful in predicting the impact of the Transaction on the future
financial condition and results of operations of the Company due to a variety of factors. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read in conjunction with the Company s consolidated
financial statements for the year ended December 31, 2022, included in the Company s Annual Report on Form 10-K filed on February 17, 2023.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
| December 31, 2022 | ||||||||||||
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | $ | 118 | $ | 92 | a | $ | 210 | |||||
| Patient accounts receivable | 2,040 | 2,040 | ||||||||||
| Supplies | 353 | 353 | ||||||||||
| Prepaid income taxes | 99 | 99 | ||||||||||
| Prepaid expenses and taxes | 237 | 237 | ||||||||||
| Other current assets | 235 | (2 | ) b | 233 | ||||||||
| Total current assets | 3,082 | 90 | 3,172 | |||||||||
| Property and equipment | 9,639 | 9,639 | ||||||||||
| Less accumulated depreciation and amortization | (4,274 | ) | (4,274 | ) | ||||||||
| Property and equipment, net | 5,365 | 5,365 | ||||||||||
| Goodwill | 4,166 | 4,166 | ||||||||||
| Deferred income taxes | 49 | 49 | ||||||||||
| Other assets, net | 2,007 | (56 | ) b | 1,951 | ||||||||
| Total assets | $ | 14,669 | $ | 34 | $ | 14,703 | ||||||
| LIABILITIES AND STOCKHOLDERS DEFICIT | ||||||||||||
| Current liabilities | ||||||||||||
| Current maturities of long-term debt | $ | 21 | $ | $ | 21 | |||||||
| Current operating lease liabilities | 148 | 148 | ||||||||||
| Accounts payable | 773 | 773 | ||||||||||
| Accrued liabilities: | ||||||||||||
| Employee compensation | 637 | 637 | ||||||||||
| Accrued interest | 189 | 189 | ||||||||||
| Other | 418 | (2 | ) b | 416 | ||||||||
| Total current liabilities | 2,186 | (2 | ) | 2,184 | ||||||||
| Long-term debt (g) | 11,614 | 11,614 | ||||||||||
| Deferred income taxes | 354 | 6 | c | 360 | ||||||||
| Long-term operating lease liabilities | 605 | 605 | ||||||||||
| Other long-term liabilities | 644 | 644 | ||||||||||
| Total liabilities | 15,403 | 4 | 15,407 | |||||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 541 | 541 | ||||||||||
| STOCKHOLDERS DEFICIT | ||||||||||||
| Community Health Systems, Inc. stockholders deficit: | ||||||||||||
| Preferred stock | ||||||||||||
| Common stock | 1 | 1 | ||||||||||
| Additional paid-in capital | 2,084 | 2,084 | ||||||||||
| Accumulated other comprehensive loss | (21 | ) | (21 | ) | ||||||||
| Accumulated deficit | (3,431 | ) | 30 | d | (3,401 | ) | ||||||
| Total Community Health Systems, Inc. stockholders deficit | (1,367 | ) | 30 | (1,337 | ) | |||||||
| Noncontrolling interests in equity of consolidated subsidiaries | 92 | 92 | ||||||||||
| Total stockholders deficit | (1,275 | ) | 30 | (1,245 | ) | |||||||
| Total liabilities and stockholders deficit | $ | 14,669 | $ | 34 | $ | 14,703 |
Unaudited Pro Forma Condensed Consolidated Statement of Income
(In millions, except per share amounts)
| Year Ended December 31, 2022 | ||||||||||||
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| Net operating revenues | $ | 12,211 | $ | (53 | ) e | $ | 12,158 | |||||
| Operating costs and expenses: | ||||||||||||
| Salaries and benefits | 5,330 | (22 | ) e | 5,308 | ||||||||
| Supplies | 1,975 | (6 | ) e | 1,969 | ||||||||
| Other operating expenses | 3,336 | (13 | ) e | 3,323 | ||||||||
| Lease cost and rent | 317 | (1 | ) e | 316 | ||||||||
| Pandemic relief funds | (173 | ) | e | (173 | ) | |||||||
| Depreciation and amortization | 534 | (3 | ) e | 531 | ||||||||
| Impairment and (gain) loss on sale of businesses, net | 71 | (36 | ) d | 35 | ||||||||
| Total operating costs and expenses | 11,390 | (81 | ) | 11,309 | ||||||||
| Income from operations | 821 | 28 | 849 | |||||||||
| Interest expense, net | 858 | 858 | ||||||||||
| Gain from early extinguishment of debt | (253 | ) | (253 | ) | ||||||||
| Gain from CoreTrust transaction | (119 | ) | (119 | ) | ||||||||
| Equity in earnings of unconsolidated affiliates | (14 | ) | (14 | ) | ||||||||
| Income before income taxes | 349 | 28 | 377 | |||||||||
| Provision for income taxes | 170 | 4 | c, d | 174 | ||||||||
| Net income | 179 | 24 | 203 | |||||||||
| Less: Net income attributable to noncontrolling interests | 133 | 133 | ||||||||||
| Net income attributable to Community Health Systems, Inc. stockholders | $ | 46 | $ | 24 | $ | 70 | ||||||
| Earnings per share attributable to Community Health Systems, Inc. stockholders: | ||||||||||||
| Basic | $ | 0.35 | $ | 0.49 | ||||||||
| Diluted | $ | 0.35 | $ | 0.48 | ||||||||
| Weighted-average number of shares outstanding: | ||||||||||||
| Basic | 129 | 127 | ||||||||||
| Diluted | 130 | 130 |
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following items resulted in adjustments in the unaudited pro forma condensed consolidated financial information:
| Cash received | $ | 92 | ||
| Less: Carrying value of Plateau | (23 | ) | ||
| Less: Goodwill allocated to sale of Plateau | (33 | ) | ||
| Pro forma gain before income taxes | 36 | |||
| Provision for income taxes | (6 | ) | ||
| Pro forma net gain on sale of Plateau | $ | 30 |